Financial Freedom

Financial freedom is a measure of banking efficiency as well as a measure of independence from government control and interference in the financial sector. State ownership of banks and other financial institutions such as insurers and capital markets reduces competition and generally lowers the level of available services.

In an ideal banking and financing environment where a minimum level of government interference exists, independent central bank supervision and regulation of financial institutions are limited to enforcing contractual obligations and preventing fraud. Credit is allocated on market terms, and the government does not own financial institutions. Financial institutions provide various types of financial services to individuals and companies. Banks are free to extend credit, accept deposits, and conduct operations in foreign currencies. Foreign financial institutions operate freely and are treated the same as domestic institutions.

The Index scores an economy’s financial freedom by looking into the following five broad areas:

• The extent of government regulation of financial services,
• The degree of state intervention in banks and other financial firms through direct and indirect ownership,
• The extent of financial and capital market development,
• Government influence on the allocation of credit, and
• Openness to foreign competition.

These five areas are considered to assess an economy’s overall level of financial freedom that ensures easy and effective access to financing opportunities for people and businesses in the economy. An overall score on a scale of 0 to 100 is given to an economy’s financial freedom through deductions from the ideal score of 100.

• 100—Negligible government interference.
• 90—Minimal government interference. Regulation of financial institutions is minimal but may extend beyond enforcing contractual obligations and preventing fraud.
• 80—Nominal government interference. Government ownership of financial institutions is a small share of overall sector assets. Financial institutions face almost no restrictions on their ability to offer financial services.
• 70—Limited government interference. Credit allocation is influenced by the government, and private allocation of credit faces almost no restrictions. Government ownership of financial institutions is sizeable. Foreign financial institutions are subject to few restrictions.
• 60—Significant government interference. The central bank is not fully independent, its supervision and regulation of financial institutions are somewhat burdensome, and its ability to enforce contracts and prevent fraud is insufficient. The government exercises active ownership and control of financial institutions with a significant share of overall sector assets. The ability of financial institutions to offer financial services is subject to some restrictions.
• 50—Considerable government interference. Credit allocation is significantly influenced by the government, and private allocation of credit faces significant barriers. The ability of financial institutions to offer financial services is subject to significant restrictions. Foreign financial institutions are subject to some restrictions.
• 40—Strong government interference. The central bank is subject to government influence, its supervision of financial institutions is heavy-handed, and its ability to enforce contracts and prevent fraud is weak. The government exercises active ownership and control of financial institutions with a large minority share of overall sector assets.
• 30—Extensive government interference. Credit allocation is extensively influenced by the government. The government owns or controls a majority of financial institutions or is in a dominant position. Financial institutions are heavily restricted, and bank formation faces significant barriers. Foreign financial institutions are subject to significant restrictions.
• 20—Heavy government interference. The central bank is not independent, and its supervision of financial institutions is repressive. Foreign financial institutions are discouraged or highly constrained.
• 10—Near repressive. Credit allocation is controlled by the government. Bank formation is restricted. Foreign financial institutions are prohibited.
• 0—Repressive. Supervision and regulation are designed to prevent private financial institutions. Private financial institutions are prohibited.

Sources. Unless otherwise noted, the Index relies on the following sources for data on banking and finance, in order of priority: Economist Intelligence Unit, Country Commerce and Country Finance, 2009–2012; International Monetary Fund, Staff Country Report, “Selected Issues,” and Staff Country Report, “Article IV Consultation,” 2009–2012; Organisation for Economic Co-operation and Development, Economic Survey; official government publications of each country; U.S. Department of Commerce, Country Commercial Guide, 2009–2012; Office of the U.S. Trade Representative, 2011 National Trade Estimate Report on Foreign Trade Barriers; U.S. Department of State, Investment Climate Statements, 2009–2012; World Bank, World Development Indicators 2012; and various news and magazine articles on banking and finance.

What is Financial Freedom?

Written by: Kim Kiyosaki

As you work towards your goals this year, you may have already run into some challenges. Well, congratulations! This is part of the valuable, learning process in achieving your dream… but this is only the beginning of your journey to financial freedom, and …

What is financial freedom?

Financial freedom is much more than having money. It’s the freedom to be who you really are and do what you really want in life. And many of us, especially women, lose site of this by putting others first and playing many different roles such as parent, spouse, employee, friend, and more.

If you want to be financially-free, you need to become a different person than you are today and let go of whatever has held you back in the past. It’s a process of growth, improvement and gaining spiritual and emotional strength to become the most powerful, happy, and successful “you” possible. That is the true reward of financial freedom.

Money Does Not Make You Rich.

Just because you have money does not mean you have financial freedom. In It’s Rising Time!, I talk about how people like Ed McMahon from The Tonight Show and Nicole Murphy, the ex-wife of actor Eddie Murphy, had millions of dollars and lost it all. Nicole Murphy spent her $15-million divorce settlement in less than four years. And towards the end of his life, Ed McMahon faced foreclosure on his Beverly Hills home and owed $747,000 in credit-card debt.

Both of these examples illustrate that even if you have a lot of money, if you don’t know what to do with it, it will be gone.

And ladies, do any of these statements sound familiar?

• I will find a rich man to take care of me.
• I don’t want to deal with finances and will ignore it.
• I’ll take the easy road today and deal with the consequences in the future.

If so, you are not alone as these are common choices women make. But if you don’t take financial matters into your own hands, your chances of having a secure, financial life are slim. The good news is that it’s not rocket science.

You can take control of your situation, no matter what it is, and enjoy financial freedom.

Enjoying the rewards of financial freedom is simply a matter of increasing your financial education and determining where you are now financially and where you want to go.

To start your journey, check out the Triple A Triangle™ from It’s Rising Time! I’ve broken down the process into three, easy-to-understand areas that include: Aspire to achieve a goal, Acquire knowledge and Apply what you’ve learned to be successful.

I know it can be scary to make change happen, but think about it: if you don’t take action now, what does your financial future really look like?

OF DANGOTE'S RISING FINANCIAL PROFILE AND THE REST OF US

by Thomas Wilson

A few days ago, the Forbes Magazine released its latest ranking of the richest people in the world. The list revealed that Nigerian billionaire and Africa's richest man, Aliko Dangote, is now Africa's first $20 billion man and the 25th richest man in the world.

The President/Chief Executive of the pan-African conglomerate, the Dangote Group, has become the first African entrepreneur to lay claim to a $20 billion fortune as the stock value of his flagship holding, Dangote Cement, leaped just about three-fourths since March 2013, when Forbes last released its yearly ranking of the world's richest people.

With a current market cap of $20.5 billion, Dangote Cement becomes the first Nigerian company to achieve a market capitalisation of over $20 billion. The global business and financial intelligence news magazine, Forbes, reported that Dangote's 93 per cent stake in the cement company is now worth $19.5 billion.

Carl Franklin, the head of Dangote Cement’s investor relations team in the UK, said:“Quarter one was the first sign of just how profitable we can be in Nigeria. The amazing thing is that 66% of our gas-fired production in quarter one was done at 84% gas. "Imagine what would happen to margins if we did the same amount at 95%. This has given investors a good sense of what we can really do when everything goes in the right direction.”

Added to this are his controlling stakes in other public-listed companies like Dangote Sugar and National Salt Company of Nigeria, and his significant shareholdings in other blue chips like Zenith Bank, UBA Group and Dangote Flour.

He equally has extensive real estate portfolio, jets, yachts and current cash position, which includes over $300 million in recently-awarded Dangote Cement, which puts his current worth at over $20 billion.

With his fortune, Dangote is richer than Russia's richest man, Alisher Usmanov, India's Lakshmi Mittal and running neck and neck with India's Mukesh Ambani. He is also catching up on such Americans as Google's billionaire founders, Larry Page and Sergey Brin.

Dangote Cement had recorded an unprecedented surge in share price largely due to market response to its impressive results in the first quarter of this year. Its unaudited results for the three months ending March 31 showed that the company's pre-tax profit rose to $339 million, representing an 80.6 per cent increase from last year and a strong indicator of the company's future earning potential.

The results also indicate a 79.5 per cent rise in its earnings per share over the corresponding period last year. While Forbes reasoned that other companies might eventually achieve this, it noted but it would take a bit of time. Dangote Cement currently accounts for over a quarter of the total market capitalization of the Nigerian Stock Exchange (NSE).

The second largest company on the NSE is currently West Africa's largest manufacturer of alcoholic and non-alcoholic beverages, Nigerian Breweries, with a market cap of $8.5 billion.

Dangote debuted on Forbes' billionaires list in 2008 with a fortune at $3.3 billion, which dropped to $2.5 billion in 2009 and plunged further to $2.1 billion in 2010.

This, however, surged 557 per cent in 2011 to $13.8 billion after he took Dangote Cement public. He dropped to $11.2 billion in last year's rankings, but rebounded at $16.1 billion this year. Since March, his fortune has jumped another 30 per cent.

Forbes believes that Dangote still has bigger ambitions, as he reportedly told the magazine's Wealth Editor, Luisa Kroll, at Davos in 2011 that he expected his firm to have a market cap of $60 billion within five years.

What I found amusing in all of this is that Aliko, the son of Dangote started off in the seventies as a mere trader in cement. Today, he is one of the world's largest cement manufacturers, vis-a-vis other business concerns.

All of us do not have to be billionaires, but we can work our ways to the top in our chosen vocations and be relevant in society and beneficial to mankind.

It is very convenient to fold your hands and blame your woes on the Nigerian epileptic system. No regular power supply, no fuel, no government incentives, no this no that. Yet, in the midst of all of these inadequacies, some people are making head ways in their chosen vocations and consistently climbing up the ladder.

Why brand yourself the weeping child? Look beyond your present status and limitations and begin to think globally. The unfortunate truth is that, there are people whose destinies are tied to yours. There are people whose elevation in life is tied to your own elevation. If you continue to complain and fail to soar above environmental limitations, you inadvertently jeopardize their emergence!

So, it is time to re-charge your inner battery. The law of relative comparison favours your glowing heretofore. For if Aliko, a little boy from Kano, can rise from nowhere to become a global brand today, then there is no tenable excuse for you not to soar. 

If he can, you can.

Dr. Thomas S. Wilson

Akure

First published in Trace News Magazine, 23rd March 2014.

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CHANGE YOUR MINDSET

7 Point Formula for Financial Freedom: Personal Finance Tips to Help You Make More Money!

Written By Brian Tracy

One goal that we all have in common is that we all want to make more money and improve our personal finance. However, only a small percentage of us actually achieve the financial freedom we long for. We all want to have enough money so that we never have to worry about money again. The only question is, “are you going to do it or not?”

The good news is that there are more people achieving financial freedom faster today than ever before. There are currently almost four million millionaires, most of them self-made, first generation. Through proper financial planning and making it a goal to improve your personal finance, you can become one of them too.

Here is a seven point formula that you can use to make more money, improve your personal finance, and achieve financial freedom in the years ahead. I have taught this proven formula to countless people in my seminars and I have never had anyone tell me that it didn’t work and that it did not help them make more money. All over the country, I run into people who improved their personal finance and are now earning many thousands of dollars more each year as a result of applying this formula and consistently improving their financial planning.

This formula for financial freedom is based on the fact that it is possible for you to increase your productivity, performance and output by one half of one percent per week. This one half percent improvement can be achieved by something as simple as setting better priorities each day. If you can improve your productivity, performance and output by one half of one percent per week, and you can do this for four weeks in a row, you will be two percent more productive than you were when you began. Here they are:

1. The Golden Hour

Get up every morning two hours before you have to be at work, or at your first appointment, and invest the first hour in yourself. This is called the “Golden Hour.” And the first hour of the morning is the rudder of the day. It sets the tone for everything that happens afterward.

If you read one hour each morning, that will translate into about one book per week. This will translate into about 50 books per year, or 500 books over the next ten years. The very act of reading one hour every single day will enable you to increase your productivity, performance and output by one half percent per week consistently. It will give you your thousand percent increase over ten years.

2. Rewrite Your Major Goals for Financial Freedom

Rewrite and review your goals every day and think of how you could accomplish them. This will take you between five and ten minutes. The very act of writing and rewriting your goals, and thinking about them each morning before you start off, will increase your productivity, performance and output by half a percent per week, two percent per month, 26% per year.

3. Plan Every Day in Advance

Step number three is for you to plan every day in advance. The best time to do this is the night before. The very act of planning each day, each week, each month, in advance will make you far sharper and more precise at everything you do. You will find yourself with better focus and a greater sense of self-control and personal power when you work from a list. Your efficiency will jump 25% the first day.

4. The Principle of Concentration

Concentrate single mindedly, every hour of every day, on the most valuable use of your time. The principle of concentration is absolutely essential to achieve financial freedom. Virtually everything you do in terms of goal setting and financial planning is aimed at enabling you to determine the one or two things that you should concentrate on more than anything else.

Your ability to develop the habit of concentration will do more to assure your personal finance success than perhaps any other skill or habit you can acquire.

5. Listen to Audio Programs to Make More Money

Listen to audio programs in your car. The average person spends 500 to 1000 hours per year behind the wheel. By turning your car into a university on wheels, you can become one of the most knowledgeable and most skilled people in your profession.

I have spoken to thousands of people who have learned how to make more money by listening to audio programs continuously as they drove around. The very act of listening to audio programs, all by itself, can give you an increase of one half percent per week and more over time.

6. Magic Questions

Ask yourself the two “Magic Questions” after every meeting and every event of importance in your life. The first question is, “What did I do right?” And the second question is, “What would I do differently, next time?”

By reviewing your performance immediately after every meeting, sales call, and presentation, you will become better and better, faster than you can imagine.

The answers to both of these questions are positive. By reviewing what you did right and what you would do differently next time, you program into your mind a predisposition to be even better the next time out. If you take a few minutes and write down everything you did right and everything you would do differently immediately after a call or presentation, you can double and triple the speed at which you learn and grow and improve in your work.

7. Learn to Appreciate

The final point is to treat everyone you meet like a million dollar customer. Treat every single person, at home and at work, as if they were the most important person in the world. Since everybody believes that he or she is the most important person in the world, when you treat them as if they were, they appreciate your recognition and acknowledgment more than you can imagine.

By setting financial freedom and personal finance accumulation as your goals, and then by implementing proper financial planning on the one hand to get better and better at what you do while on the other hand saving more and more of what you earn, you will become financially independent, if not a self-made millionaire in the years ahead.

I hope you enjoyed this article on how to improve your personal finance and achieve financial freedom! If you have any other personal finance tips that have helped you make more money over the years, please share and comment below!

Robert Kiyosaki’s 10 Keys to Financial Freedom

By Joel Brown

Financial freedom is one of the most desired wishes anyone has, and it is so for a good reason. You can never expect when there will be a financial crisis, sweeping away all your wealth and income sources. As a result, educating yourself about the importance of financial freedom, as well as the means to achieve it is very essential.

Robert Kiyosaki, an eight-grade dropout entrepreneur and investor, is one of the most popular financial literary activist and commentators living today. His book “Rich Dad Poor Dad” is rated as one of the best personal finance books of all time, and in it he details many ways to achieve financial freedom.

Here are Robert Kiyosaki’s 10 Keys to Financial Freedom:

1. Accept Full Responsibility

Every choice you make has its own consequences, some of which may cause damage to your wealth irreversibly. Hence, you must accept complete responsibility to secure your financial future. Understand that every decision and choice you make today will impact your life tomorrow. Therefore, it is essential that you evaluate all your financial decisions, purchases and expenses within the context of your long-term financial objectives.

2. Control Your Spending

We live in a consumer-driven world where we are compelled to spend continuously. Your spending habits are one of the main reasons why you won’t be able to secure your financial future easily. Track your every expense and think twice before making any purchase. It will be hard to do so at first, especially if you are prone to uncontrollable spending, but once you learn how to manage your expenses, then moving towards achieving your financial freedom will be a cakewalk.

3. Having a Budget is Crucial

Creating a budget and living within its limitations is crucial for achieving financial freedom in your life. A budget gives you the input you need to manage your income and control your expenses. In short, a budget gives you a sense of accountability. If you want to secure your personal finances, then a budget will provide you with tools to achieve just that.

4. Pay Yourself First

One of the key fundamental practices to achieve financial freedom is to work for yourself, rather than work for a bank or a credit card company. Learn to pay yourself first before you pay someone else. By doing this you achieve two things: you make yourself richer, and you stop getting poorer.

Only when you save money today can you invest it tomorrow, ensuring your financial freedom in the process.

5. Never Have Any Debt

Debt is one of the leading causes of financial insecurity in many people’s lives. It starts consuming you from the inside, stopping you from pursuing your dreams, hopes and goals in life. Debt deprives you of a happy future. Being debt-free should be one your unrelenting goals in life, and you should commit yourself totally to stay that way.

Debt-free living should be your passion if you want to achieve financial freedom.

6. Establish an Emergency Fund

An emergency fund is a cash cushion that will support your living expenses for at least 3 months. It can also come in handy when you need to cover unforeseen expenses in your everyday life such as repairs, medical expenses and other emergencies. Having an emergency fund is essential to make sure that you don’t resort to debt when such situations arise. Ensuring that your living expenses will be covered will also give you “peace of mind”.

One of the best ways to have a cash cushion is to set up an alternate bank account and start saving for your emergency fund.

7. Never Stop Learning

Educating yourself about financial matters regularly should be your top priority.

Today, there are countless sources to update your knowledge about the finance industry and how it works. Take full responsibility of your financial life by committing yourself completely to it. Instead of reading all topics in one sitting, you can start learning one subject at a time. For example, you can read about home budgets if that is what you are interested in. Likewise, there are many other financial matters that you can learn consecutively, thereby increasing your overall financial literacy.

8. Have Clear and Concise Financial Goals

If you don’t have any clear defined financial goals, then it will be very hard to work towards securing your financial freedom. If you want to establish a big business, work towards it by starting your own company. Alternatively, if you want to be an investor, learn to pick the right opportunities and grab them immediately when available. Only when you have your financial goals clearly in your mind will you be able to recognize your true potential.

Having goals and working towards them will also motivate you to life the life you’ve already dreamed out.

9. Network Marketing

The low startup cost of setting up a network marketing company is a great advantage to have. It is very hard to start a big business without huge investments and time.

A network marketing company will give you the time you need to build your business skills and transition from being a low-level employee to a highly paid businessperson. Hence, networking marketing is one of the perfect ways to secure your financial freedom. Network Marketing supplies you with a residual income, so you make money while you sleep and travel.

10. Simplify Your Life

Life is becoming more complex with almost every passing day. Running after money and your financial goals will distract you from things that are very important in life. As a result, you will start to lose your motivation and slump into the darkness. Hence, it is very essential that you simplify your life by freeing up your mind of all the clutter.

The key to financial freedom is very simple: convert your regular earned income into passive income or portfolio income. With this in mind, it is very easy to achieve the goals you desire without giving up on things that you hold close to your heart.

How to Achieve Financial Freedom

Financial freedom is the ability to do whatever a person wants to do without being limited by money concerns. For some, it may mean becoming a billionaire, while for others, it may mean being content with what they have. Taking the right actions will help you become closer to your idea of financial freedom.   Steps

1. 
   1
   Develop a long-term plan. You need clear goals to keep you on track in order to be successful.
   • On a piece of paper or computer document, make a list of each goal that you want to reach in order to be successful. Some examples are to pay off your credit cards, save money for a down payment for a house, or retire at a certain age.
   • List a desired target date for reaching each goal.
   • List an estimate of what it will cost to reach each goal.
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2. 
   2
   Make a budget. A budget is your playbook for how to spend your money. You need it to keep your spending within reason and help you to ensure that you have enough money to cover your current needs as well as to save for your long-term goals.
3. 
   3
   Resolve to live debt-free. If you are currently in debt, plan your budget so that you can get out of debt more quickly by making extra payments. If you are not in debt, continue to live that way by putting off your purchases until you have saved enough to cover them.
4. 
   4
   Reduce your expenses. Cutting spending by even a small amount on a regular basis will make a big difference in the long run. Live frugally by learning to recognize the difference between want and need.
5. 
   5
   Increase your income. It is wise to have more than one source of income, both to increase your savings more quickly and as insurance in the event that you lose your job. There are a number of ways to supplement your income, from working a part-time job to developing streams of passive income.
6. 
   6
   Invest your money. Your money will grow much faster if you invest it rather than leaving it in a savings account. The increase in value will enable you to reach your goal of financial independence much more quickly.
7. by: WikiHow

Focus on financial freedom instead of debt

There is an interesting concept taught to race car drivers that also applies to consumers trying to reach their financial goals. One of the things drivers worry about the most is hitting the wall during the race. Trainers instruct their drivers to focus on going straight and maintaining speed, and that avoiding the wall is inevitable. People who focus too much attention on “hitting the wall” often find themselves in the position they feared most.

The same can be said about focusing too much on debt and other obstacles hindering financial success. Instead of focusing too much on the possibility of failure or ‘hitting the wall,’ concentrate on reaching financial freedom.

Each year during Financial Literacy Month, thousands of consumers take the pledge to begin the path toward financial freedom on FinancialLiteracyMonth.com. While this year’s month long financial literacy initiative is over, the quest for financial freedom continues. The financial educators at Money Management International offer the following tips on how to create wealth and avoid debt throughout the rest of the year.

Invest wisely. Many people find themselves in difficult financial distress because they have not properly prepared for emergencies or for the future. If you don’t want to end up broke, start putting things in place now to help you reach your financial goal/s.

• Start contributing to a 401(k) account or some other retirement investment. A little put away now will bring huge results later.
• Build an emergency savings fund. Prepare for the unexpected such as a job loss, home or car repairs, and even periodic expenses. This way you won’t have to rely on credit when these instances occur.

Hone your passion. Invest in a career that is rewarding and challenging. Don’t chase money. Many people are living their dreams and making money at the same time.

Protect assets. Insurance may seem like wasting money, but it will come in handy when it’s needed and could save you a boatload of emergency expenses. Make sure all your valuables are protected including yourself. Purchase the right coverage to avoid an unnecessary financial strain.

Pay off credit card debt. Carrying a credit card balance each month is not helping you. The money going towards payments could be put to good use in another area. Be careful not to charge more than you can afford to pay off in a reasonable amount of time (90 days or less). Also, don’t use more than 30 percent of your credit limit.

A good piece of advice on obtaining wealth is to simply live within your means. Spend less than you earn. Don’t buy a $60,000 car when you’re only earning $30,000. Develop some achievable financial goals and stay on course – and off the wall.

by MMI Resources

10 tips for financial freedom

Investment Yogi

Financial freedom is directly linked to wealth creation, and cannot be achieved without elaborate planning, first to reach the goal of being financially independent, and second to maintain that level

For majority of us, our primary source of income is from our personal efforts (job, business or profession). More often than not, our entire lives and consequently those of our families, revolve around our careers -  long hours of work, ruthless competition, insecurity about the future, lack of personal time, and so on.

To keep up with our own demands, as well as so as not to be left behind in society, we immerse deeper into our work, resulting in even more stress, failures in personal relationships and lower self esteem. Ironically, all this is done with the desired objective of providing our families with a better quality of life.

Wouldn't it be great if one doesn't have to entirely depend upon personal efforts to take care of one’s needs?  This would entail creating additional streams of regular income, to supplement or even replace the primary source. If this was possible, most of us would no longer be working without choice, but would work for joy and self fulfillment.

We would have the flexibility to work at our own pace and devote our time to other pursuits we are interested in. Our objective of a better quality of life would be fulfilled. This is what is known as financial freedom – when one is no longer dependent upon personal efforts to maintain a desired level of living standard.

Financial freedom is directly linked to wealth creation, and cannot be achieved without elaborate planning, first to reach the goal of being financially independent, and second to maintain that level. The goal is to achieve an amount of capital which not only provides enough regular returns to meet ongoing lifestyle expenses, but also that the composition of capital is such that it is likely to increase in value over time, so that future returns are generated on the increased capital base and are able to take care of the future increase in expenses due to inflation.

While for the majority of families it would seem very difficult to reach such a level, it is certainly not impossible, and can be achieved with some discipline and sacrifices.

Below are some of the rules which from my experience are paramount in wealth creation and consequently, in achieving financial freedom:

Decide upon your level of wealth required for financial freedom – This will be directly proportional to the lifestyle you wish to follow after becoming financially independent. If one is used to living and dining in Five Star comfort regularly and expects it to continue after becoming financially independent, obviously a much higher level of wealth has to be targeted than for someone who is happy eating out once or twice a month. Hence scaling down one’s lifestyle can lower the threshold required for financial freedom.

Know where you are before you start – It is essential to make a complete list of one’s Assets and Liabilities, Incomes and expenses (both current and expected in future) and cash flows before one starts. One cannot reach a destination without knowing where he or she is starting at.

Give priority to protection of what you have – Insure all your assets as well as payment of liabilities against unforeseen circumstances which have the potential to destroy your wealth.

Know your attitude to risk - This depends upon one’s personality, age, commitments, current level of assets/liabilities/income, etc. Attitude to risk is not fixed, and may change over time or due to changing personal or external circumstances. Generally, higher the capacity and willingness to bear risk, higher is the return, but this is not always true.

Get your finances under control – This implies stopping money leakages, however small or insignificant they may seem. Most money leakages are through unnecessary tax and interest expenses, wrong spending and wrong investments. Money leakages are the most common reason for inability to create wealth.

Pay off debts on priority - Unless the debt is incurred for creating an asset which is expected to increase in value or for business purposes, it is not advisable to incur debt. Any other debt, if incurred, should be paid off on priority.

Keep the taxman at bay – Apart from interest, tax expense is the highest expense item which prevents long term wealth creation. Be prepared to pay for expert tax and financial advice. It may seem expensive at first, but the benefits will far outweigh the costs in the long run.

Understand that there is no such thing as free advice – Advice given by many financial product sellers may seem to be free (as they do not charge you fees but earn from product commissions), but in the long run it must align with your financial goals. If not, it can be very costly indeed. There are only two mantras that ultimately work – spend less than you earn, and buy low and sell high.

Understand that gaining wealth is a slow process – Earning it too quickly (say a lottery or inheritance) may make you rich, but it does not give you experience in acquiring wealth, which is vital for keeping and growing that wealth.

Understand and implement the power of compound interest - Albert Einstein called it the Eighth wonder of the world. Interest compounded over a long period of time has a tremendous capacity to create unimaginable amounts of wealth.

Lastly, understand and accept that money is not the solution to all problem - It makes life easier, but does not solve all problems. It is the oil that smoothens the engine. It is not the engine. So take it easy and do not be consumed by the exclusive desire to earn more and more, as it will destroy peace of mind and defeat the objective of being financially independent.

                             




Source: InvestmentYogi